PML/(PCL)—A problem with the bull case for PML in the Seeking Alpha write-up is that holders of the auction-rate preferred shares might eventually file a lawsuit when they get tired of earning essentially nothing due to an anomaly in the marketplace that nobody foresaw. Even if Pimco is on solid ground legally, they might opt to settle up with the preferred shareholders to avoid tarnishing the firm’s reputation. Were that to happen, the purported NAV mispricing of PML would disappear.
Let me propose a different alternative to owning muni bonds: PCL (Plum Creek Timber)! It pays a generous dividend (which is taxed at LT capital-gains rates), the assets that underpin the dividend are wood solid (LOL), and I expect one or two dividend increases in the next couple of years. It’s one of the stocks in my list of top names for long-term buy and hold (#msg-89692658). Regards, Dew
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